65 YEARS ADDING VALUE Industrias Bachoco S.A.B. de C.V.

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1 a n n u a l r e p o r t 65 YEARS ADDING VALUE Industrias Bachoco S.A.B. de C.V.

2 Bachoco s PROFILE Industrias Bachoco is leader in the Mexican poultry industry and one of the ten largest poultry producers globally. The Company was founded in 1952 and became a public company in 1997, via a public offering of shares on the Mexican and the New York stock exchanges. Bachoco is a vertically-integrated company with operations in Mexico and the US with its headquarters located in Celaya, Guanajuato, Mexico. Its main business lines are: chicken, table eggs, balanced feed, swine, and others, including further process products of turkey and beef. Currently the Company is rated AAA (MEX), the highest rating awarded by Fitch Mexico, and HR AAA which signals that the Company and their bonds both have the highest credit quality by HR Ratings de Mexico S.A. de C.V. Bachoco owns and manages: Enrique Robinson Bours Honorary President of the Board of Directors and Co-founder + than1000 fa r m s 10 processing PLANTS 9 further processing plants 22 feed mills 26 hatcheries + than 80 DISTRIBUtION CEnters the company employs more than 27,000 PEople

3 index Highlights Message to Shareholders CEO s Letter Report from the Board of Directors Audit and Corporate Practices Committee Report from the Audit and Corporate Practices Committee Highlights to Investors Board of Directors Senior Management Team 65 years Adding Value Social Responsibility Consolidated Financial Statements

4 highlights In U.S. Dollar 1 In millions pesos Net sales $ 2, , , ,229.0 Gross profit , , ,381.5 Operating income , , ,053.5 EBITDA Result , , ,873.4 Net income $ , , ,819.5 EPS in pesos Earnings per ADR en pesos Gross margin 18.2% 18.2% 18.0% 20.3% Operating margin 9.1% 9.1% 9.2% 10.9% EBITDA margin 11.1% 11.1% 11.1% 12.7% Net margin 8.5% 8.5% 7.6% 8.3% OPERATING DATA 1 One dollar equal to $19.66 pesos STATEMENT OF FINANCIAL DATA In millions pesos December 31, In U.S. Dollars TOTAL ASSETS $ 2, , , ,446.6 Cash and cash equivalents , , ,290.1 Inventories , , ,404.3 TOTAL LIABILITIES $ , , ,667.2 Notes payable to banks , , ,631.9 Accounts payable , , ,597.1 Long-term debt , ,495.1 TOTAL STOCKHOLDERS EQUITY $ 1, , , ,779.4 Capital stock , , ,174.4 Retained earnings 1, , , , % 5% 5% 84% CHICKEN EGG BALANCED FEED OTHERS SALES BY GEOGRAPHY MÉXICO 72% USA 28% NET SALES 1 ANNUAL REPORT 2017 EMPLOYEES ,397 25,725 25,231

5 message to SHAREHOLDERS In year 2017, we celebrated 65 years of presence in the poultry industry and 20 years as a public company [... ]Our goal is to keep our position in Mexico as the leader of the poultry sector and to be one of the main players worldwide, [... ] Javier Bours Castelo Chairman of the Board of Directors Dear Shareholders of Industrias Bachoco: 2017 was a year that started under adverse macroeconomic expectations in Mexico and with high volatility on the Mexican peso exchange rate. However, conditions improved along the year, the GDP grew 2.3% in 2017 and, on average, the Mexican peso slightly depreciated vs the US dollar. The inflation rate in 2017 was 6.77%, a relatively high value compared with previous year values. In the Mexican poultry industry, it is expected that chicken production continued growing 3.3%, a normalized growth level. In general, we saw a good balance between supply and demand for most of the year, with some over-supply conditions in the fourth quarter. It is expected imports of chicken from the US declined in 2017, this change in trend reflects the capacity and competitiveness of the Mexican industry. After oversupply conditions for nearly one year in the table eggs business line, conditions improved substantially in the second semester of the year. In the US, the poultry industry grew 2.4% above its normalized growth levels; however, a good balance between supply and demand was observed for most of the year. On the cost side, the US poultry industry continued to capitalize the benefits of a good grain crop, allowing stable raw materials costs in dollar terms. In Mexico, prices of raw material costs were relatively stable for most of the year. In Mexico, we increased our total sales in our main product lines, reinforcing our presence in all the commercial channels we participate in. Regarding our US operation, it continued yielding positive results and moving from commodity to value added products. In March, we announced a recall of approximately 1 million pounds of breaded chicken products produced at our Oklahoma City plant. We identified and isolated the problem and took immediate actions to increase quality control measures in this plant. We have been working intensively to restore the confidence of our customers for products produced in this facility. We continue working on our growth plans for the company. We increased our CAPEX to more than $3,500 million, focusing mainly on organic growth projects, and productivity projects along our supply chain. In 2017, we materialized two acquisitions: ANNUAL REPORT

6 The first one, through our subsidiary OK Foods, we acquired Alabama-based Albertville Quality Foods (AQF), a company that produces and sells value added further processed products, with sales of around $270 million USD a year. With this acquisition, we will continue the growth of our US operation, mainly with further processed products. The second one, through our subsidiary Campi Alimentos S.A. de C.V, we acquired La Perla, a Pet Food company located in the Mexican state of Queretaro and with the capacity to produce dry pet food, wet food and Pet Food Treats. With this acquisition, we are increasing significantly our Pet Food capacity, a product line in which we have had satisfactory results so far, and in which we see an interesting future. We are integrating these companies into our normal operations and capturing the opportunities and synergies we have identified. In September of last year, we were challenged by natural disasters in both Mexico and the US. While there were no material damages in our facilities, those events affected the economical dynamic in important regions of Mexico. This caused a temporary lower demand in Mexico, resulting in over supply conditions; conditions that changed at the end of the year. Our company focused on providing immediate assistance to our employees and their families affected by these unfortunate events, and to help those affected by donating prepared foods directly and through some of the food chains we work with, in coordination with Mexican authorities. Also, we continue our operations for keeping the supply of our food products to all the regions we attend, either affected or not by these events. In August, we successfully issued bonds for $1,500 million, through the public issuance of bonds in the Mexican debt capital markets for a tenor of 5 years, maturing in This reflects the confidence the financial community has in our company. In year 2017, we celebrated 65 years of presence in the poultry industry and 20 years as a public company, trading in the Mexican Bolsa and in the NYSE. When we went public, our total sales were nearly $0.5 billion USD a year, 20 years later our total sales were more than $3.0 billion USD. We finished 2017 with very satisfactory results, as we reached historically high net sales, EBITDA and earnings per share, among other parameters. Our financial structure continued strong as we ended the year with a net cash of nearly $12,000 million, which will allow us to continue supporting our short and long-term growth plans. As always, these results were possible with the support of our management team and staff, integrated by more than 27,000 people. We know we still have many opportunities to improve our performance, as well as many challenges and uncertainties to face, but we are confident in the hard work and commitment of our staff to reach the Company s goals. I would like to remind you of the commitment that we have with all of you; Our goal is to keep our position in Mexico as the leader of the poultry sector and to be one of the main players worldwide, while continuing to grow our business with profitability, delivering positive results and maintaining the solid financial structure that always characterizes us. Javier Bours Castelo Chairman of the Board of Directors 3 ANNUAL REPORT 2017

7 CEO s letter Dear Shareholders: All figures discussed below are information for 2017 with comparative figures of It was prepared under IFRS accounting principles, and is presented in millions of pesos unless otherwise indicated. According to the Mexican National Poultry Association estimates, in 2017 chicken volume produced in Mexico grew within its normalized growth range, during most part or the year we observed a good balance between supply and demand, except in the last quarter in which natural disasters affected important regions in Mexico, events that had an impact on demand which was fulfilled by the end of the year. Regarding table egg industry, we observed oversupply conditions during the first semester, those conditions changed during the second half of the year when we observed a good balance between supply and demand. We continue with our growing plans regarding our Balance Feed business line, particularly on pet food where we consider there are good opportunities that we can capture. Regarding the US poultry industry, according to USDA sources, chicken volume produced in the US grew 2.4%, slightly above it s normal rate of 1.0 to 1.5% without showing oversupply conditions. During 2017, we kept consolidating several projects; from projects directed to increase our production capacity along our entire supply chain, identifying and eliminating bottle necks, projects to increase or maintain our facilities at the highest levels of efficiency within the industry, to projects that allow us to move towards our goal of being close and to better understand and attend to their needs. Our financial position, in particular our derivatives position, remained healthy throughout 2017; We continue with a very disciplined practice in this sense & 2016 RESULTS Net sales in 2017 totaled $58,050.0 million, $6,029.7 million more or a 11.6% increase in net sales, when compared to $52,020.3 million reported in This increase was mainly due to higher volume sold and price increases in poultry. Rodolfo Ramos Arvizu Director General In 2017, sales of our US operation represented 28.4% of our total sales, compared with 25.8% in The Company s sales on poultry increased 12.0%, while Others increased 7.8%; both as a result of higher volume and prices when compared to Particularly on poultry we reached an increase of 3.3% in volume sold and 8.7% increase in prices, this last one, mainly due to a higher mix of value added products in our U.S operation. Cost of sales totaled $47,503.0 million, 11.4% higher than the $42,635.1 million reported in The increase in cost of sales was mainly attributed to more volume sold and higher inflation rate in Mexico and a mix effect, due to a higher percentage of value added products in our US operations. These numbers allowed us to post a gross profit of $10,547.1 million, which represented 18.2% of gross margin; slightly higher than $9,385.2 million of gross profit and a margin of 18.0% reached in Total SG&A expenses in 2017 were $5,423.4 million, an increase of $575.5 million or 11.9% ANNUAL REPORT

8 when compared to $4,847.9 million in Total SG&A expenses as a percentage of net sales represented 9.3% in 2017 and 9.3% in In 2017, we had other income of $167.6 million, compared with other income of $260.2 million reported in This is mainly attributed to gains in the sale of several unused assets during the year. The operating income in 2017 totaled $5,291.3 million with a margin of 9.1%, higher than the $4,797.6 million of operating income and 9.2% margin as reported in In 2017, we reached an EBITDA of $6,424.1 million, representing and EBITDA margin of 11.1%, compared to an EBITDA de $5,777.0 million in 2016, with a margin of 11.1%. In 2017, we reached an EBITDA of $6,424.1 million, representing an EBITDA margin of 11.1%, compared to an EBITDA of $5,777.0 million in 2016, with a margin of 11.1%. Net financial income was $747.6 million, a decrease when compared to the net financial income of $797.0 million in Total taxes were $1,084.4 million. This includes $1,711.5 million income tax and a favorable effect of $627.1 million on deferred taxes. This figure compares to total taxes of $1,643.4 million which includes income tax of $1,260.5 and $382.9 million of deferred tax in In fourth quarter of 2017, we recognized a favorable effect on deferred taxes as a result of the fiscal change approved by the U.S authorities at the end of the year. As a result, net income in 2017 was $4,954.4 million, an 8.5% net margin, which represents earnings per share of $8.25 pesos, while in 2016, net income totaled $3,951.1 million with a 7.6% net margin, and $6.58 pesos of earnings per share. Cash and equivalents as of December 31, 2017 totaled $17,240.1 million, an increase of $1,580.3 million or 10.1% more than the $15,659.8 million of cash and equivalents reported as of December 31, Total debt as of December 31, 2017 was $5,249.0 million, compared to total debt of $4,047.9 million reported as of December 31, As a result, our net cash as of December 31, 2017 totaled $11,991.1 million, compared with a net cash of $11,611.9 million as of December 31, Capex in 2017 totaled $3,513.4 million, this includes assets from acquisitions made that year, an increase when compared to $2,459.7 million reported in In 2017, the Company continued with the implementation of new projects oriented toward organic growth and productivity improvements. Rodolfo Ramos Arvizu Chief Executive Officer 5 ANNUAL REPORT 2017

9 report from THE BOARD OF DIRECTORS As Chairman of the Board of Directors of Industrias Bachoco, and pursuant to the provisions of Section IV of Article 28 of the Securities Market Law, I hereby inform you of the following: This Board of Directors reviewed and approved the Chief Executive Officer s report which supports the performance of management for fiscal year 2017, and it was based on the independent auditor s Opinion. The Board believes that the CEO s report was prepared in accordance with the Financial Reporting Standards and reflects the Company s financial position and its operating results. We believe that the Company s policies, accounting and reporting principles followed are adequate and consistent with the Audited Financial Statements. This Board directed the Company to continue acting in strict accordance with IFRS principals. We determined that during year 2017, the Company did not engage in unusual operations or other activities different from the normal course of the business. No exemptions were granted to any member of the Board, executive officers or any other member of the Company to take advantage of business opportunities for themselves or in favor of third parties. Lastly, the Board presented in the Annual Ordinary Shareholders Meeting the report of the Auditing and Corporate Practices Committee, the Chief Executive Officer s report, the report on prompt compliance with tax obligations, and the report on the principal accounting and information policies and criteria followed by the Company in the preparation of its financial statements for fiscal year Javier Bours Castelo Chairman of the Board of Directors ANNUAL REPORT

10 audit and corporate PRACTICES COMMITTEE Bachoco has an Auditing and Corporate Practices Committee to support the Board of Directors, which is comprised of three Independent Directors and one Property Shareholder Director. This Committee was last ratified on the Annual and General Ordinary Shareholders Meeting on April 26, AUDIT COMMITTEE AND CORPORATE PRACTICES MEMBERS Guillermo Ochoa Maciel (President) Humberto Schwarzbeck Noriega Avelino Fernandez Salido Ricardo Aguirre Borboa 7 ANNUAL REPORT 2017

11 annual report OF THE PRESIDENT OF THE AUDIT AND CORPORATE PRACTICES COMMITTEE TO THE BOARD OF DIRECTORS In accordance with the terms of the Mexican Market Security Law (LMV), this report is issued by the President of the Audit and Corporate Practices Committee of Industrias Bachoco S.A.B. de C.V. (the Society ). This report has been submitted to the Audit and Corporate Practices Committee of the Company, which validated content, scope and conclusions for the Board of Directors approval and through the Board, its validation in the Annual and General Ordinary Shareholders Meeting of the Company that will take place in April In the exercise of the Committee functions, and in attention of its responsibilities, the Committee has counseled with the Chief Financial Officer, the Internal Audit Manager and, the Chief Executive Officer of the Society. The resolutions adopted by the Audit Committee have been informed timely and submitted to the consideration of the Board of Directors by means of the respective report submitted to this ultimate superior social entity in the corresponding meetings. A file has been integrated from each meeting, including the reports and other relevant documents. Regarding Corporate Practices: We concluded that the Officers performance was aligned with the Company s objectives. We reviewed the CEO and senior officers and compensation packages were granted. We verified that there was no existence of any grant or exceptions to Directors, senior officers, or other employees of the Company. In 2017, the total transactions in connection to related parties represented less than 3.5% of the Company s net sales. After an exhaustive review of the transactions carried out with related parties, we concluded that they were conducted in fair-market terms. We reviewed policies and guidelines related to the use of goods that constitute the equity of the Company and its subsidiaries, by any related parties, as well as policies for granting of loans or any type of credit or guarantees. We analyzed and assessed the services provided by the independent experts, when it was required. Regarding Internal Audit Function: The Audit and Corporate Practices Committee has remained involved with the needs of the internal audit area to make sure they have the necessary human and material resources for the suitable performance of its function. The evaluations carried out by the Internal Audit, the external auditors, and the General Director have been reviewed, and it is concluded that the internal control processes provide reasonable security to prevent or detect errors or material irregularities in the normal course of social operations, although these processes are constantly improving and the corresponding revisions continue. Regarding Financial Information: The Financial Statements of the Company were discussed quarterly with the executives responsible for their preparation and review, there were no significant observations to the information presented. Before being forwarded to the Mexican Stock and Exchange, the Financial Statements were reviewed by the Committee for its approval or ratification by the Board of Directors. In each quarterly Committee s meeting, reports to the Stock Exchange were analyzed and approved, having made the observations or suggestions of the case and recommending to the Board of Directors its approval (or ratification) in each case regarding its public disclosure. During the period in question, Financial Statements corresponding to 2017 fiscal year were reviewed and discussed, and did not submit observations and/or qualifications, in consequence, the Committee recommended its approval by the Board of Directors for submission to the Shareholders Meeting. Regarding External Audit Performance: The services of Galaz, Yamazaki, Ruiz Urquiza, S.C. (Deloitte) continued to be used as External Auditors of the Company. The fees corresponding to 2017 were duly revised and approved. The Audited Financial Statements as of December 31, 2017 were received on the part of the External Auditor. The Audit Committee concludes that the performance of Galaz, Yamazaki, Ruiz Urquiza, S.C. (Deloitte) as External Auditors of the Company and of its partners in charge ANNUAL REPORT

12 of the respective audit, is appropriate and that the communication between such Committee and the auditors referred herein is consistent. The External Auditors confirmed their independence. Regarding Accounting and Self-Regulatory Policies: The main accounting policies followed by the Company were reviewed and approved in terms of the information received by reason of new regulations. During the period, the updates proposed by the Administration to various self-regulatory policies were reviewed, on which were favorably expressed for submission to the Board of Directors. The accounting policies, criteria, and information observed by the Company are adequate and sufficient. Conclusions: The recommendations of the Audit and Corporate Practices Committee have been, or are being addressed by the Administration of the company. During the reported period, the Audit and Corporate Practices Committee did not receive from Shareholders, Directors, relevant executives, employees and in general from any third party, any remarks about accounting, internal controls and other matters related to the Internal or External Audit, other than those issued by the management during the preparation or revision of the respective documentation; no complaints were received about any irregular matters regarding the Administration. The Audit and Corporate Practices Committee has followed, within its competence and in accordance with the instructions received, the resolutions of the Board of Directors and the Shareholders Meeting during the reporting period. From all the above, the Audit and Corporate Practices Committee has fulfilled the functions stated in Article 42, paragraph II of the LMV, during the reporting period. OPINION OF THE AUDIT COMMITTEE TO THE BOARD OF DIRECTORS ON THE ANNUAL REPORT OF THE CHIEF EXECUTIVE OFFICER After having listened and analyzed the CEO s report for the fiscal year ended on December, 31, 2017, prepared in terms and for the purposes of the stated of Article 44, section XI of the Security Market Law, in relation to Article 172 of the General Law of Business Corporations and based on the reports of the External Audit presented to the Committee, the Audit and Corporate Practices Committee has determined that: (i) the accounting and information policies and criteria followed by the Company are adequate and sufficient, taking into account the Company s particular circumstances; (ii) these accounting policies and criteria have been consistently applied in the information presented by the CEO; (iii) as consequence of the previous numerals (i) and (ii), the information presented by the CEO reflects the Company s financial situation and results for the fiscal year Based on the above, under the terms and for the purpose of the provisions of the Article 42, paragraph II, section e) of the LMV, the Audit and Corporate Practices Committee recommend to the Board of Directors the approval of the CEO`s annual report for fiscal 2016, for its presentation to the Annual and General Ordinary Shareholder s Meeting of the Company. Guillermo Ochoa Maciel President of Bachoco s Audit and Corporate Practices Committee 9 ANNUAL REPORT 2017

13 highlights TO INVESTORS in 2017 THE COMPANY'S SHARES AND ADRS REACHED A YIELD OF 10.5% ON THE BMV AND OF 16.9% ON NYSE bachoco IN THE STOCKS million shares - One single class (Class B) - Full rights - An ADR equals 12 shares % of float - An estimated $56,172 million pesos in market capitalization The founding family holds 73.25% of total shares By two Trusts: - Control Trust with 52.00% - Underwriting Trust with 21.25% SHARE PRICES Bolsa Mexicana de Valores In pesos per Share The New York Stock Exchange In dollars per ADR Year High Low Average Close Year High Low Average Close Source: Yahoo Finance ANNUAL REPORT

14 board of DIRECTORS Bachoco s Board of Directors is comprised of eight Proprietary Shareholder Directors, four Alternate Shareholder Directors, and four Independent Proprietary Directors. This board was last ratified on April 26, The Board s main duties include the following: Determine policies, general strategies, and the organization and management criteria that guide the activities of the Company. Prepare and develop programs to optimize resource management and the operation of the business, such as budgets and financial planning. After considering the Auditing and Corporate Practices Committee s opinion, approve the internal control and guidelines of the internal auditing of the Company. Authorize acquisitions or disposing, as well as the granting of guarantees or the taking of liabilities for a value equal to or higher than five per cent of the consolidated assets of the Company, except for investments in debt securities or bank instruments; provided such are made in accordance with the policies approved by the Board for such purposes. Review and authorize operating results and work plans, and the overall compensation of the Company s senior officers. PROPRIETARY SHAREHOLDERS DIRECTORS Javier Bours Castelo (Chairman of the Board), Jose Gerardo Robinson Bours Castelo, Jesus Enrique Robinson Bours Muñoz, Jesus Rodolfo Robinson Bours Muñoz, Arturo Bours Griffith, Octavio Robinson Bours, Ricardo Aguirre Borboa and, Juan Salvador Robinson Bours Martinez. INDEPENDENT PROPRIETARY DIRECTORS Avelino Fernandez Salido, Humberto Schwarzbeck Noriega, Guillermo Ochoa Maciel and, David Gastelum Cazares. ALTERNATE SHAREHOLDERS DIRECTORS Jose Eduardo Robinson Bours Castelo alternate of Javier Bours Castelo and Jose Gerardo Robinson Bours Castelo. Jose Francisco Robinson Bours Griffith, alternate of Octavio Robinson Bours and Arturo Bours Griffith. Guillermo Pineda Cruz, alternate of Jesus Enrique Robinson Bours Muñoz and Jesus Rodolfo Robinson Bours Muñoz. Gustavo Luders Becerril, alternate of Juan Salvador Robinson Bours Martinez and Ricardo Aguirre Borboa. HONORARY MEMBERS OF THE BOARD Enrique Robinson Bours Almada, Mario Javier Robinson Bours Almada, Juan Bautista Salvador Robinson Bours Almada. SECRETARY OF THE BOARD Eduardo Rojas Crespo 11 ANNUAL REPORT 2017

15 senior management TEAM Rodolfo Ramos Arvizu / Chief Executive Officer R. Trent Goins / Director of U.S. Operations Ernesto Salmon Castelo / Director of Operations Andrés Morales Astiazaran / Director of Sales Daniel Salazar Ferrer / Chief Financial Officer Augusto Franco Gomez / Director of Marketing Ismael Sanchez Moreno / Director of Human Resources Alejandro Elias Calles Gutierrez / Director of Purchasing ANNUAL REPORT

16 65 years adding value Bachoco was born 65 years ago, currently, is considered the largest poultry company in Mexico and one of the top producers worldwide, constantly growing on infrastructure, with a wide range of products and a wellrecognized brand which gives Bachoco solid presence in the market. This can only be achieved by consistently adding value and satisfying our groups of interest expectations. We constantly look for ways to add value to our products and processes in order to keep our vision of being present every day in the consumer s nourishment. 13 ANNUAL REPORT 2017

17 TOGETHER FOR OUR BACHOCO TEAM We consolidated the Bachoco Welfare program by focusing on three specific areas: Occupational Welfare, Personal Welfare and Social Welfare. Through this program, the company seeks more people join our initiatives and perceive the value of belonging to a company focused on taking care of the life quality of its collaborators. TOGETHER FOR OUR PLANET The interaction we have with the environment is a key aspect in which we seek to contribute in a positive way. Proof of these efforts are the water treatment plants in our production centers. Social Responsibility Bachoco s Social Responsibility program is based on 5 essential cornerstones seeking to achieve an integral approach for the improvement of collaborators, surrounding communities and the environment. We work hard every day to achieve these goals and 2017 was evidence of it. TOGETHER FOR OUR BUSINESS We define strategic lines in which we focus our efforts. Following those strategic lines, we consolidated programs such as the deployment of Bachoco s Cultural Model, the Corporative University and Bachoco Welfare, thinking always of our people. TOGETHER FOR OUR COMMUNITY Our commitment and collaboration with neighboring communities constitutes one of our working areas. Beyond providing support in natural disaster situations, we also developed initiatives that contribute to the community improvement. TOGETHER FOR OUR PRODUCTS Our work in safety and food quality is a continuous task and we consolidated it through the certification in SQF (Safe Quality Food). ANNUAL REPORT

18 CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Auditors Consolidated Statements of Financial Position Consolidated Statements of Income and Other Comprehensive Income Consolidated Statements of Cash Flows

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24 INDUSTRIAS BACHOCO, S.A.B. DE C.V. AND SUBSIDIARIES Consolidated Statements of Financial Position December 31, 2017, 2016 and 2015 (Thousands of pesos) Assets Note Liabilities and equity Note Current assets: Current liabilities: Cash and cash equivalents 7 $ 16,112,268 14,681,204 14,046,262 Short term debt 18 $ 2,852,400 1,444,800 1,622,850 Investment in securities at fair value through profit or loss 8 1,127, ,292 1,242,614 Current portion of long-term debt ,651 1,652,725 9,033 Derivative financial instruments 8-8,308 1,244 Derivative financial instruments 8 6, Accounts receivable, net 9 3,626,878 3,629,144 2,533,427 Trade payable and other accounts payable 19 4,740,366 4,545,177 4,597,103 Due from related parties , ,522 Income tax payable , , ,205 Inventories 10 4,727,333 3,970,688 3,404,269 Due to related parties 20 55, , ,628 Current biological assets 11 1,942,193 1,961,191 1,651,794 Total current liabilities 9,229,144 8,316,286 6,642,819 Prepaid expenses and other current assets ,671 1,503,945 1,587,808 Assets held for sale 13 49,523 56,728 60,048 Long term liabilities: Total currents assets 28,225,033 26,930,355 24,721,988 Long term debt, excluding current installments 18 1,553, ,412 2,495,127 Deferred income tax 21 3,843,379 3,912,575 3,369,036 Non-current assets: Employee benefits , , ,218 Property, plant and equipment, net 14 17,320,041 15,081,105 13,188,131 Total long term liabilities 5,650,317 5,058,006 6,024,381 Non-current biological assets 11 1,617,503 1,668,543 1,434,131 Deferred income tax 21 80,670 60,132 54,127 Total liabilities 14,879,461 13,374,292 12,667,200 Goodwill 15 1,631, , ,295 Intangible assets 16 1,040, Equity: Other non-current assets , , ,906 Capital stock 25 1,174,432 1,174,432 1,174,432 Total non-currents assets 22,332,356 18,160,111 15,724,590 Share premium 414, , ,017 Reserve for repurchase of shares 493, , ,622 Retained earnings 32,367,912 28,244,970 24,749,616 Foreign currency translation reserve 1,268,021 1,465, ,439 Actuarial remeasurements, net 22 (98,938) (86,774) (97,196) Equity attributable to controlling interest 35,618,953 31,662,311 27,728,930 Non-controlling interest 58,975 53,863 50,448 Total equity 35,677,928 31,716,174 27,779,378 Commitments 27 Contingencies 28 Total assets $ 50,557,389 45,090,466 40,446,578 Total liabilities and equity $ 50,557,389 45,090,466 40,446,578 See accompanying notes to consolidated financial statements. 21

25 INDUSTRIAS BACHOCO, S.A.B. DE C.V. AND SUBSIDIARIES Consolidated Statements of Profit and Loss and Other Comprehensive Income Years ended December 31, 2017, 2016 and 2015 (Thousands of pesos, except share and per share amount) Note Net revenues $ 58,050,025 52,020,303 46,229,049 Cost of sales 23 (47,502,959) (42,635,071) (36,847,508) Gross profit 10,547,066 9,385,232 9,381,541 General, selling and administrative expenses 23 (5,423,379) (4,847,858) (4,323,374) Other income (expenses), net , ,202 (4,640) Operating income 5,291,329 4,797,576 5,053,527 Finance income 29 1,087, , ,845 Finance costs 29 (340,091) (172,154) (147,292) Net finance income 747, , ,553 Profit before income taxes 6,038,879 5,594,596 5,500,080 Income taxes 21 1,084,444 1,643,433 1,680,560 Profit for the year $ 4,954,435 3,951,163 3,819,520 Other comprehensive income (loss) items: Items that may be reclassified subsequently to profit or loss: Currency translation effect (197,636) 755, ,332 Items that will not be reclassified subsequently to profit or loss: Actuarial remeasurements 22 (17,377) 14,888 (25,944) Income taxes related to actuarial remeasurements 5,213 (4,466) 7,783 Other comprehensive income (209,800) 765, ,171 Comprehensive income for the year $ 4,744,635 4,716,803 4,303,691 Profit attributable to: Controlling interest $ 4,948,242 3,946,634 3,812,840 Non-controlling interest 6,193 4,529 6,680 Profit for the year $ 4,954,435 3,951,163 3,819,520 Comprehensive income attributable to: Controlling interest $ 4,738,442 4,712,274 4,297,011 Non-controlling interest 6,193 4,529 6,680 Comprehensive income for the year $ 4,744,635 4,716,803 4,303,691 Weighted average outstanding shares 599,997, ,979, ,631,383 Basic and diluted earnings per share 26 $ See accompanying notes to consolidated financial statements. 22

26 INDUSTRIAS BACHOCO, S.A.B. DE C.V. AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended December 31, 2017, 2016 and 2015 (Thousands of pesos) Note Cash flows from operating activities: Profit for the year $ 4,954,435 3,951,163 3,819,520 Adjustments for: Deferred income tax recognized in profit or loss 21 (627,090) 382, ,070 Current income tax recognized in profit or loss 21 1,711,534 1,260,529 1,488,490 Depreciation 14 1,075, , ,270 Goodwill impairment loss ,619 Loss (Gain) on disposal of plant and equipment 41,890 (157,245) 90,279 Interest income 29 (857,109) (646,334) (489,934) Interest expense , , ,292 Unrealized foreign exchange loss on loans 82, ,850 33,300 Subtotal 6,638,045 6,159,769 6,088,906 Derivative financial instruments 15,129 (7,064) 5,425 Accounts receivable, net 162,906 (1,144,991) 521,603 Due from related parties 3,967 1,154 (3,518) Inventories (461,783) (562,905) (448,404) Current and non-current biological assets 70,941 (539,395) (256,969) Prepaid expenses and other current assets 875,307 82,324 (401,711) Assets held for sale 7,205 3,320 (1,465) Trade payable and other accounts payable (350,299) (43,707) 629,631 Due to related parties (134,714) 24,338 38,595 Income taxes paid (1,405,256) (997,028) (2,087,286) Employee benefits 57,946 34,801 43,375 Net cash provided by operating activities 5,479,394 3,010,616 4,128,182 Cash flows from investing activities: Payments for acquisition of property, plant and equipment (2,126,361) (2,792,252) (1,909,771) Proceeds from sale of plant and equipment 35, ,340 71,427 Restricted cash (24,058) (19,236) (25,771) Investment in securities at fair value through profit or loss (157,549) 272,322 (317,030) Other assets 2,125 4,583 (55,698) Interest collected 857, , ,934 Bussiness acquisition including advance payment (2,494,862) - (190,595) Loans granted to related parties - - (189,075) Collection of principal of loans granted to related parties 144,562 44,513 - Net cash used in investing activities (3,763,859) (1,565,396) (2,126,579) Cash flows from financing activities: Payment for repurchase of shares (1,800) (4,157) (40,612) Proceeds from issuance of repurchased shares - 5,224 54,289 Dividends paid (780,000) (779,960) (899,162) Dividends paid to non-controlling interest (1,081) (1,114) (878) Proceeds from borrowings 5,378,915 2,320,500 3,903,200 Principal payment on loans (4,246,100) (2,670,474) (2,231,596) Interest paid (255,997) (172,154) (147,292) Net cash provided by (used in) financing activities 93,937 (1,302,135) 637,949 Net increase in cash and cash equivalents 1,809, ,085 2,639,552 Cash and cash equivalents at January 1 14,661,968 14,020,491 11,028,054 Effect of exchange rate fluctuations on cash and cash equivalents (383,230) 498, ,885 Cash and cash equivalents at December 31 $ 16,088,210 14,661,968 14,020,491 See accompanying notes to consolidated financial statements. 23

27 DEPOSITARY BANK BNY MELLON BNY Mellon Shareowner Services T.US: 888 BNY ADRS T Proxy Services Toll Free: T. (212) INDEPENDENT AUDITORS Deloitte Touche Tohmatsu /Galaz, Yamazaki, Ruiz Urquiza, S.C. T. +52 (442) CORPORATE HEADQUARTERS Industrias Bachoco S.A de C.V. Av. Tecnológico 401 Celaya, Guanajuato 38030, México T.+52 (461) F. +52 (461) INVESTOR RELATIONS María Guadalupe Jáquez Andrea Guerrero T. +52 (461) (México) Financial Statements Consolidated 2017 The digitalized version of the Annual Report 2017 of Bachoco, as well as the Consolidated Financial Statements with their respective notes are available at the following addresses: Annual Report 2017 (PDF) Consolidated Financial Statements 2017 (PDF)

28 Industrias Bachoco S.A.B. de C.V.